March 14, 2008

The Honorable Carl Levin Chairman The Honorable Norm Coleman Ranking Member Permanent Subcommittee on Investigations Committee on Homeland Security and Governmental Affairs United States Senate

The serious fiscal challenges facing the federal government demand that agencies do everything they can to operate as efficiently as possible. The federal government spends billions annually through its purchase card programs, using purchase cards and convenience checks1 to acquire millions of items—everything from paper and pencils to computers—and to make payments on government contracts for a variety of goods and services, such as vehicles and relocation services. The primary responsibility for purchasing these items rests with cardholders and the officials who approve their purchases. Because of the position of public trust held by federal employees, Congress and the American people expect cardholders and approving officials to maintain stewardship over the federal funds at their disposal. Specifically, purchase cardholders and approving officials are expected to follow published acquisition requirements and exercise a standard of care in acquiring goods and services that is necessary and reasonable (i.e., not extravagant or excessive) for the proper operation of an agency. Because every federal dollar that is spent on fraudulent, improper, and abusive purchases is a dollar that cannot be used for necessary government goods and services, ensuring that purchase cards are used responsibly is of particular concern at a time when the United States is experiencing substantial fiscal challenges.

Our previous work has shown that using the purchase card for small purchases has reduced administrative costs and increased the flexibility to

1Convenience checks are part of the purchase card program and are issued to authorized cardholders. Agency management determines to whom checks are issued. The checks are similar in appearance to personal checks and are written against the cardholder’s purchase card account. The total amount that may be written cannot exceed the cardholder’s single- transaction limit. Convenience checks are designed to be used in instances where a merchant does not accept purchase cards.